The Administration recently unveiled its plans to award 15% of prime contracting dollars to qualified Small Disadvantaged Businesses (“SDBs”). This goal is a 50% increase from average annual SBDs spending of 9.8% over the last five years. While the new goal is aggressive and ambitious, the federal government targets 2025 to achieve its plan to help level the playing field in government contracting. This includes an additional $100 billion to SBDs over the next five years.

What Does It Mean for SDBs?

Since President Biden announced this initiative in December 2021, SDBs have seen an uptick in contracts and award opportunities. These are minority-owned businesses that may not have previously had an equal opportunity to participate in government contracting due to a lack of information or resources.

With the increased goal, SDBs are getting access to more opportunities than ever before. The hope is that this will result in increased revenue, growth, and success for these businesses over the long term.

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What Qualifies as a Small Disadvantaged Business?

A SDB is a small business owned and controlled at least 51% by one or more individuals who are U.S. citizens and socially and economically disadvantaged as defined by the SDB Small Business Administration’s (“SBA”) criteria.

Socially Disadvantaged – Individuals who have been subject to racial or ethnic prejudice or cultural bias within American society or systems, including:

African Americans
- Asian Pacific Americans
- Hispanic Americans
- Native Americans
- Subcontinent Asian Americans

Economically Disadvantaged – Socially disadvantaged individuals who have limited access to capital and credit opportunities through a diminished ability to compete in a free market.

Members of other groups may qualify if they can satisfactorily demonstrate they meet the established criteria.

In addition, the individual(s) personal net worth cannot exceed $850,000, have adjusted gross income of more than $400,000, and total assets of more than $6.5 million. The business must also meet the SBA’s size standards as a small business. Size standards are dependent on the business’s industry, how many employees they have and annual income.

How Can Federal Agencies Reach the 15% Goal?

The first step has been for agencies independently to develop strategies that will help them reach their spending goals. These strategies include initiatives such as outreach programs that target SDBs, workshops on best practices for competing for contracts, and mentorship programs that make sure these businesses have access to resources and advice from experienced professionals.

Additionally, agencies have been mandated by the Administration in 2022 to review their current contract awards processes and modify them accordingly to meet their goals of awarding 15% of prime contracting dollars to SDBs by 2025. This also involves creating more set-aside and sole source contracts opportunities for certified SDBs.

In addition, agencies are working with the SBA to ensure they are getting the message out and helping SDBs get SBA Certified in programs such as 8(a) Business Development Program (“8(a)”), HUBZone Program (“HUBZone”), Women-Owned Small Business Program (“WOSB”), Service-Disabled Veteran and Veteran-Owned Small Business Program (“SDVOSB/VOSB”), and on the state level Minority Business Enterprise (“MBE”), Disadvantaged Business Enterprise (“DBE”), and Women Business Enterprise (“WBE”). These programs help SDBs gain access to contracts they otherwise wouldn’t have been able to bid on.

According to the SBA, agencies awarded a record $62.4 billion to SDBs in FY2021, totaling 11% of all contracting dollars. Agencies also awarded record spending in FY2021 to other SBA certified small business categories as the federal government exceeded its small business spending goals.

The federal government continues to work toward implementing procurement equity and inclusion initiatives and taking additional steps to build diversity and resilience in its supplier base. Reaching this goal requires hard work from agencies as well as the SDBs. By leveling the playing field in government contracting through initiatives such as outreach programs, mentorship programs, incentive-based awards processes, set-aside and sole source award opportunities, and changes to procurement rules, the federal government can ensure that all qualified companies have a fair chance at winning contracts regardless of size or socioeconomic status. Ultimately, this increased goal has great potential for increasing economic growth and prosperity among minority-owned small businesses across America.

FedBiz Access (“FedBiz”) has an experienced team that works with SDBs and takes the time to get to know their business and ask questions to ensure they have a solid contracting plan. FedBiz is a leading government contracting business development and marketing firm that provides SBA Certification registrations, as well as SAM & DSBS registration, GSA Schedules, market research, and engagement strategy coaching.

FedBiz has over 22 years of experience working with thousands of companies worldwide to help them win over $35.7 billion in awards. From registration to award, FedBiz helps businesses succeed in the government marketplace.

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